They pay a coupon rate (currently 3.94%) each year based upon an inflation indexed principal value (ie the interest payments vary with the CPI). Upon maturity they return the inflation indexed principal amount.

If you hold them in a taxable account, you have to pay taxes on the increase in principal each year. The tax calculation is difficult.

If you hold them in an IRA, the taxes are much cleaner. The standard IRA tax rules hold.

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.

Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.